Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: form 3cd :: list of goods taxed at 4% :: cpt :: empanelment :: TDS :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: Central Excise rule to resale the machines to a new company
« News Headlines »
 New Opening Financial Controller Chartered Accountant (Manufacturing Plant) A Leading Company
 Income Tax Filing 2017: All you want to know about the single page ITR form SAHAJ
 How to benefit from investments in tax saving mutual funds
 60 per cent of income tax notices on fishy cash deposits returned
 All about income tax return form Sahaj
 Why seeing Form 26AS is a must before filing tax return and how to access it
 No tax on notice period pay cut
 Interpretation Of Central Goods And Services Tax (Cgst) Act (Part-1)
 What to do if you haven’t filed your taxes
 Income Tax Declaration To Employer: 10 Changes You Should Be Aware Of
 What your income tax says about you

Elusive clarity
October, 13th 2007

It is ironic that even after 13 years of the law being in force, one needs to refer to legal provisions to decide whether a particular service is taxable under the Finance Act, 1994 as service tax or not. While the marquee services are not spared, there is confusion with respect to the one-off and slightly low-key services.

While it is not to be disputed that the law has come a long way since it was conceptualised, one would not be asking for too much if one expects more clarity in the law.

Is it a service?

The CESTAT (Customs, Excise and Service Tax Appellate Tribunal) Bangalore in CCE, Bangalore vs Denso Corporation 2007 TIOL-1324- CESTAT, Bangalore, ruled that transfer of technology is not taxable under the head consulting engineer. The same Tribunal, in CCE & ST, Bangalore vs Siddharath Polymers 2007-TIOL-1366-CESTAT, Bangalore, ruled that a consignment agent is not a clearing and forwarding agent. Another decision of the same appellate authority, Karakkattu Communications vs CCE, Cochin 2007-TIOL-1374-CESTAT, Bangalore clarified that sale of SIM cards are not exigible to service tax.

The CESTAT Mumbai had a larger issue on hand to decide whether the Institute of Banking Personnel Selection is a commercial concern. In Institute Of Banking Personnel Selection vs CST, Mumbai 2007-TIOL-1393-CESTAT, Mumbai, the Tribunal ruled that the Institute is not a commercial concern. The dictionary meaning of commercial concern defined as having financial gain as an object and having profit as a primary aim rather than artistic value and the same Tribunals ruling that BCCI is not a commercial concern (BCCI vs CCE 2007-TIOL-684-CESTAT Mumbai) were helpful in this decision.

Nature of service

To add a bit of humour to the spate of case laws, the Bangalore Tribunal held that repairing of wigs does not amount to beauty treatment and, hence, cannot be costlier by 12.36 per cent (CCE, Mangalore vs Beau Mondes Clinic 2007-TIOL-1521-CESTAT Bangalore).

From the Prasanna Travels Pvt Ltd vs CCE & ST, Pune (2007-TIOL-1519-CESTAT, Mumbai) ruling, travel agencies that provide stage carriers came to know that they need not charge service tax for provision of stage carriers. Customs house agents cannot be brought under port services was the decision of the Ahmedabad Tribunal in Velji P & Sons (Agencies) Pvt Ltd vs CCE, Bhavnagar (2007-TIOL-1452-CESTAT, Ahmedabad).

In Kusalava Finance Ltd vs CC & CE, Guntur (2007-TIOL-1010-CESTAT, Bangalore), it was held that financing the purchase of automobiles is neither hire purchase service, banking or other financial services. It becomes very clear that one cannot look into the broad activity and decide whether it is a service or not without going into the nitty-gritty of the service rendered.

Notification 40/2007

As if the mushrooming case laws are not enough, we now have Notification No 40/2007 which exempts port and allied services in connection with export from the whole of the service tax leviable. The concept of exemption seems to be different under service tax laws, what with the need to pay the service tax and then knock at the doors of the excise authorities for a refund armed with documentary evidence of both export as well as the payment of service tax.

The sympathetic eye being shown towards exporters appears to be with an intent to enable them ride over the rise in the value of the rupee. In what appears to be a coincidence, the Export of Service Rules also provide for a similar methodology to claim the exemption, with the difference being that the Export of Service Rules needed some terms and conditions to be fulfilled while Notification 40 seems to be an omnibus exemption endowing the taxpayer with the exemption if the twin duties of exporting service and paying the tax thereon are complied with.

Just as the cricket fever lasts only till the season is on, it appears that the limelight on service tax provisions lasts for only a few months, that is, from the Budget till the Finance Act is adopted. All the activity that happens between the adoption and the next Budget are shrugged off as inevitable. One hopes it is a matter of time before this trend is reversed and simplified provisions are legislated.

Mohan R. Lavi
(The author is a Hyderabad-based chartered accountant.)

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Internet Marketing Website Marketing Internet Promotion Internet Marketing India Website Marketing India Internet Promotion India Internet Marketing Consultancy Website Marketing Consulta

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions